Domestic biodiesel industry adapting to new economic landscape as federal support dries up

Feb 07, 2012

At midnight on December 31 of 2011 the Federal Blender’s Credit for America’s biodiesel industry expired. This expiration effectively puts the brakes on growth of one of the most effective, efficient and successful fuel alternatives to petroleum diesel. Biodiesel producers and consumers are bracing for price increases.

At midnight on December 31 of 2011 the Federal Blender’s Credit for America’s biodiesel industry expired. This expiration effectively puts the brakes on growth of one of the most effective, efficient and successful fuel alternatives to petroleum diesel. Biodiesel producers and consumers are bracing for price increases.

Starting in 2005 domestically produced biodiesel has benefited from a biodiesel tax credit that has reduced the cost of biodiesel and encouraged the development of this promising, clean energy industry.

The biodiesel tax credit, though only a fraction of what the petroleum industry receives in incentives and tax breaks, has been critical for the biodiesel industry and has helped to achieve massive gains in environmental improvement and displacement of imported foreign oils.

In, January 1, 2010 the biodiesel tax credit expired and was not renewed until early 2011. In 2010, industry wide there were price increases resulting in less demand for biodiesel which caused a 42% reduction in biodiesel production. In 2010, many biodiesel producers were forced to shut down their plants, causing nearly 9000 workers to lose their jobs, according to a study by the National Biodiesel Board.

The credit was renewed in 2011, and was by all accounts an exceptional year for domestic, renewable fuels. The US biodiesel industry broke records and expectations in 2011 by creating and supporting nearly 40,000 jobs and the production of over 1 billion gallons of clean-burning biodiesel fuel.

To date congress has failed to take the actions necessary to extend this important legislation in the US Senate (Senate Bill s.1277) and the US House of representatives (HR 2238). On January 1, 2012 the domestic biodiesel industry entered a more challenging market competing against heavily subsidized, non-renewable and green house gas emitting petroleum products.

U.S. Senator Maria Cantwell sponsored the biodiesel tax credit extension in the Senate, and U.S. Senator Patty Murray was one of eight cosponsors. However, the bill has not moved beyond committee. Rep. Aaron Schock of Illinois introduced the house version, which is also stuck in committee. Biodiesel prices are expected to rise as result of this inaction from Congress.

Your leading Pacific Northwest biodiesel producers urge you to support your local fuels and contact your congressperson asking for the passage of Senate Bill s.1277 and House bill HR 2238.

LOCAL BIODIESEL PRODUCER QUOTES:

“The biodiesel tax credit is needed to help build demand and eventually replace a globally finite and polluting supply of crude oil,” said Tyson Keever of SeQuential Pacific Biodiesel.

“The tax credit helps promote research & development and build a market for a clean, renewable energy source,” said Zach Shelton, Vice President, General Biodiesel.

“The lack of certainty around when the Government might renew the Blenders Credit when was very damaging in 2010, and we are concerned about potential price increases for our customers,” said Joel Edmonds, Inland Empire Oilseed.

“To see the growth our industry has experienced in the last year – from production gains to creating local jobs, to see that growth potential slow is very frustrating,” laments Steven Verheys, Central Washington Biodiesel.

Biodiesel is made from new and used vegetable oil and is blended with petroleum diesel to produce a cleaner burning renewable source of fuel. Locally, used cooking oil is collected from restaurants and converted into biodiesel and canola and other plants are farmed and used to produce biodiesel.

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To schedule an interview with an executive from one of the Northwest biodiesel producers please contact Tim Priest, CMO Strategy Group at 503-713-3212, or